Two weeks ago, in our Newsflash dated 22 January 2015, we discussed the latest developments in respect of the EU FTT since the turn of the year.
Following the lack of consensus between the 11 participating Member States (“PMS’) at the end of last year, it was therefore noteworthy that President Hollande of France stated his strong support for an EU FTT earlier this month. The model put forward by President Hollande is broad in scope but with lower rates. The French position was supported by comments from the Austrian Finance Minister, Hans Jörg Schelling. However, it remained to be seen how much support this new proposal would receive from the other PMS.
Following last ECOFIN Council meeting, 10 of the PMS signed a Joint Statement (the “Joint Statement”) reaffirming their commitment to the introduction of the EU FTT.
The signatories to the Joint Statement did not include Greece, who up until now has been part of the PMS. However, this may simply be a result of the recent elections in Greece (much like the absence of Slovenia from the last Joint Statement in May 2014).
As regards the scope of the tax, the Joint Statement echoes the recent French proposals, stating the intention of the PMS to proceed with a model based on “the widest possible base and low rates”.
Comments from Dr Schelling indicate that a phased approach is still envisaged, over 2016 and 2017. This could, for example, see the introduction of a tax on equities and certain derivatives in the first instance, followed by other financial instruments as part of a second stage.
It is difficult to see how the proposed timeframe would allow sufficient time for the PMS to agree the scope of the tax and for this to be implemented in time for 1 January 2016.
Whilst this is not the first statement of this kind to be released by the PMS, it may, nevertheless, provide an indication that there is now sufficient political will for the EU FTT to be introduced.
What happens next?
At this stage there is little clarity on the precise details of the scope or model of the tax that is now favoured. The next step is therefore for the PMS to agree these details. It is understood that Portugal will be involved in leading the technical work that needs to be undertaken. The PMS have also called upon the European Commission to provide technical assistance.
An update on progress is expected at the next ECOFIN Council meeting.